Cognizant Technology Solutions Corp. (CTSH) Stock Recommendation | Score, Valuation, Technicals & Financial Trend

Score

Click here to find our call on this stock

Strong Sell

Sell

Hold

Buy

Strong Buy

Comparison

Company

Score

Quality

Valuation

Financial

Technical

Cisco Systems, Inc.

Workday, Inc.

Fortinet, Inc.

Accenture Plc

Nu Holdings Ltd.

Cognizant Technology Solutions Corp.

Broadridge Financial Solutions, Inc.

Cloudflare, Inc.

International Business Machines Corp.

Block, Inc.

CDW Corp.

Why is Cognizant Technology Solutions Corp. ?

High Management Efficiency with a high ROE of 17.01%

The company is Net-Debt Free

Poor long term growth as Operating profit has grown by an annual rate 7.57% of over the last 5 years

Flat results in Jun 26

ROCE(HY) Lowest at 14.92%
INTEREST COVERAGE RATIO(Q) Lowest at 8,200
CASH AND EQV(HY) Lowest at USD 2,568 MM

With ROE of 14.85%, it has a attractive valuation with a 1.90 Price to Book Value

The stock is trading at a premium compared to its peers' average historical valuations
Over the past year, while the stock has generated a return of -14.79%, its profits have fallen by -4.3%

High Institutional Holdings at 100%

These investors have better capability and resources to analyse fundamentals of companies than most retail investors.

Consistent Underperformance against the benchmark over the last 3 years

Along with generating -14.79% returns in the last 1 year, the stock has also underperformed S&P 500 in each of the last 3 annual periods

Real-Time Research Report

Verdict Report

How much should you hold?

Overall Portfolio exposure to Cognizant Technology Solutions Corp. should be less than 10%
Overall Portfolio exposure to Computers - Software & Consulting should be less than 30%

(If sector exposure > 30%, please use optimiser tool to see which are the best stocks to hold in Computers - Software & Consulting)

When to exit? - We will constantly monitor the company and suggest at the appropriate time to exit from the stock

Is Cognizant Technology Solutions Corp. for you?

High Risk, Low Return

Absolute

Risk Adjusted

Volatility

Cognizant Technology Solutions Corp.

-14.79%

-0.26

41.56%

S&P 500

15.36%

1.17

13.09%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

4.86%

EBIT Growth (5y)

7.57%

EBIT to Interest (avg)

100.00

Debt to EBITDA (avg)

Net Debt to Equity (avg)

-0.08

Sales to Capital Employed (avg)

1.32

Tax Ratio

24.19%

Dividend Payout Ratio

27.19%

Pledged Shares

Institutional Holding

100.00%

ROCE (avg)

25.03%

ROE (avg)

17.01%

Valuation

Valuation Scorecard

Valuation grade scale :

Very Risky, Risky, Very Expensive, Expensive, Fair, Attractive, Very Attractive

Valuation Key Factors

Factor

Value

P/E Ratio

Industry P/E

Price to Book Value

1.90

EV to EBIT

8.16

EV to EBITDA

7.01

EV to Capital Employed

1.98

EV to Sales

1.30

PEG Ratio

Dividend Yield

222.77%

ROCE (Latest)

24.26%

ROE (Latest)

14.85%

Technicals

Technical key factors

Indicator

Weekly

Monthly

MACD

Bearish

RSI

No Signal

Bollinger Bands

Mildly Bearish

Bearish

Moving Averages

Bearish (Daily)

KST

Bearish

Dow Theory

No Trend

Mildly Bearish

OBV

Mildly Bearish

Technical Indicator Scale: Bearish, Mildly Bearish, Sideways, Mildly Bullish, Bullish Turned

Technical Movement

Analyse All Technical Factors

Financial Trend

Financial Trend Scorecard

Financial Trend scale:

Very Negative, Negative, Flat, Positive, Very Positive, Outstanding

10What is working for the Company

OPERATING CASH FLOW(Y)

Highest at USD 2,917 MM

DIVIDEND PER SHARE(HY)

Highest at USD 4.71

NET SALES(Q)

Highest at USD 5,481 MM

OPERATING PROFIT(Q)

Highest at USD 1,066 MM

OPERATING PROFIT MARGIN(Q)

Highest at 19.45 %

PRE-TAX PROFIT(Q)

Highest at USD 959 MM

NET PROFIT(Q)

Highest at USD 697.82 MM

-12What is not working for the Company

ROCE(HY)

Lowest at 14.92%

INTEREST COVERAGE RATIO(Q)

Lowest at 8,200

CASH AND EQV(HY)

Lowest at USD 2,568 MM

DEBT-EQUITY RATIO (HY)

Highest at 7.21 %

DEBTORS TURNOVER RATIO(HY)

Lowest at 4.71 times

INTEREST(Q)

Highest at USD 13 MM

OPERATING PROFIT(Q)

Lowest at USD 923 MM

OPERATING PROFIT MARGIN(Q)

Lowest at 16.84 %

Here's what is working for Cognizant Technology Solutions Corp.

Operating Cash Flow

Highest at USD 2,917 MM and Grown

In each year in the last three years

MOJO Watch

The company has generated higher cash revenues from business operations

Operating Cash Flows (USD MM)

Dividend per share

Highest at USD 4.71 and Grown

In each year in the last five years

MOJO Watch

Company is distributing higher dividend from profits generated

DPS (USD)

Net Sales

Highest at USD 5,481 MM

in the last five periods

MOJO Watch

Near term sales trend is positive

Net Sales (USD MM)

Operating Profit

Highest at USD 1,066 MM

in the last five periods

MOJO Watch

Near term Operating Profit trend is positive

Operating Profit (USD MM)

Operating Profit Margin

Highest at 19.45 %

in the last five periods

MOJO Watch

Company's profit margin has improved

Operating Profit to Sales

Pre-Tax Profit

Highest at USD 959 MM

in the last five periods

MOJO Watch

Near term Pre-Tax Profit trend is positive

Pre-Tax Profit (USD MM)

Net Profit

Highest at USD 697.82 MM

in the last five periods

MOJO Watch

Near term Net Profit trend is positive

Net Profit (USD MM)

Depreciation

Highest at USD 143 MM

in the last five periods

MOJO Watch

The expenditure on assets done by the company may have gone into operation

Depreciation (USD MM)

Here's what is not working for Cognizant Technology Solutions Corp.

Interest

At USD 13 MM has Grown at 85.71%

period on period (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (USD MM)

Interest Coverage Ratio

Lowest at 8,200

in the last five periods

MOJO Watch

The company's ability to manage interest payments is deteriorating

Operating Profit to Interest

Interest

Highest at USD 13 MM

in the last five periods and Increased by 85.71% (QoQ)

MOJO Watch

Rising interest cost signifies increased borrowings

Interest Paid (USD MM)

Operating Profit

Lowest at USD 923 MM

in the last five periods

MOJO Watch

Near term Operating Profit trend is negative

Operating Profit (USD MM)

Operating Profit Margin

Lowest at 16.84 %

in the last five periods

MOJO Watch

Company's profit margin has deteriorated

Operating Profit to Sales

Cash and Eqv

Lowest at USD 2,568 MM

in the last six Semi-Annual periods

MOJO Watch

Short Term liquidity is deteriorating

Cash and Cash Equivalents

Debt-Equity Ratio

Highest at 7.21 %

in the last five Semi-Annual periods

MOJO Watch

The company is borrowing more to fund its operations; it's liquidity situation may be stressed

Debt-Equity Ratio

Debtors Turnover Ratio

Lowest at 4.71 times

in the last five Semi-Annual periods

MOJO Watch

Company's pace of selling Debtors has slowed

Debtors Turnover Ratio